What is a depository receipt?
- A depositary receipt (DR) is a type of financial security that is traded on a local stock exchange but represents a security, usually in the form of equity, that is issued by a foreign publicly listed company. Depositary receipts allow investors to invest in shares of foreign companies in their local currency.
- DRs generally represent fractional ownership of the underlying stock, with each DR representing one half, one third, one quarter or even one tenth of an underlying shares. The price of the DR usually trades close to the value of the underlying shares on a currency conversion.
What are the benefits of holding depository receipts?
- Local investors get access to foreign companies’ shares in local currency
- Permitting dividends and other distribution in local currency thus eliminating conversion risk
- Facilitate diversification into external markets
- Familiar trade, clearance and settlement procedures
- Easy to purchase, hold or sell on the local stock exchange
- Provides institutional investors with the opportunity to invest in international companies that otherwise may have been restricted
- Opportunity to benefit from economic growth in other countries
How are depository receipts traded?
- Depository Receipts are traded in the same manner as normal equity securities. Investors who are interested in buying or selling depository receipts must contact a Registered Broker to have the requisite buy or sell order entered on their behalf.
How is the closing price of the security determined?
- The Emera Deposit Receipt is a Sponsored Depository Receipt and thus its closing price on the Barbados Stock Exchange Inc. (BSE) is based on the closing price of its base security, Emera Incorporated (EMA), which is listed on the Toronto Stock Exchange (TSX). At the end of each trading day, the BSE liaises with the TSE to obtain the closing price of the base security – EMA – and makes the necessary conversions to calculate the closing price of the Emera Deposit Receipt (EMABDR). This closing price then becomes the opening price for this security on the next trading day.
What does surrendering a depository receipt mean?
- Surrendering your Emera Deposit Receipt means relinquishing ownership of your depository receipts in exchange for the following:
- A whole number of Emera Incorporated Shares represented by the depository receipts; and
- Cash, in Barbados dollars, representing any remaining fractional Emera Incorporated share.
How do I go about surrendering my depository receipts?
- To surrender your Emera Deposit Receipts, kindly complete the Emera Deposit Receipt Surrender Notice Form and submit it to the Barbados Central Securities Depository Inc. (BCSDI).
What happens after I surrender my depository receipts?
- After the depository receipts are surrendered, the new holder of Emera Incorporated shares will either be issued with a physical certificate, a record of which is kept by the BCSDI or, in book entry form in a Canadian brokerage account.